President Barack Obama said during his Latin America trip in April that he does not believe “if we showed courtesy or opened up dialogue with governments that had previously been hostile to us, that that somehow would be a sign of weakness.” Unfortunately, he does not understand that is exactly how hostile powers view such American overtures. In the last two months, rogue states Iran and North Korea have been emboldened to conduct missile tests and advance their nuclear programs while rejecting Obama’s diplomatic overtures. Anti-American regimes in Venezuela and Cuba have been able to breathe more easily. And behind these revisionist states, Beijing has gained new confidence that its rise will be allowed to continue without counteraction as the days of U.S. “hegemony” come to an end.

While China is rejoicing at the prospect of dethroning the United States, America’s allies are worried. Though the Obama administration is filled with people who believe strong U.S. leadership alienates foreign opinion, firm international alliances are built on strength and trust. Being weak and unreliable are not the qualities sought in times of danger.

In his foreword to the 140-page report, Minister of Defense Joel Fitzgibbon states “the biggest changes to our outlook over the period have been the rise of China, the emergence of India and the beginning of the end of the so-called unipolar moment; the almost two-decade-long period in which the pre-eminence of our principal ally, the United States, was without question.” Though the discussion of China within the report is hemmed in by diplomatic calls “to engage China as a responsible stakeholder,” it is clear that the rise of China is not treated as benignly as the emergence of India. Beijing is seen as a potential menace, New Delhi as a potential ally.

The paper reports, “Changes in the distribution of global power have become obvious in the past decade. China's rise in economic, political and military terms has become more evident. Pronounced military modernisation in the Asia-Pacific region is having significant implications for our strategic outlook.” The paper goes on to warn, “China will also be the strongest Asian military power, by a considerable margin. Its military modernisation will be increasingly characterised by the development of power projection capabilities. A major power of China's stature can be expected to develop a globally significant military capability befitting its size. But the pace, scope and structure of China's military modernisation have the potential to give its neighbours cause for concern if not carefully explained, and if China does not reach out to others to build confidence regarding its military plans.” In the chapter of “Australia’s Strategic Interests” it is stated:

We would be concerned about the emergence of a security environment dominated by any regional power, or powers, not committed to the same shared goals. It would be in our strategic interests in the decades ahead that no power in the Asia-Pacific region would be able to coerce or intimidate others in the region through the employment of force, or through the implied threat of force, without being deterred, checked or, if necessary, defeated by the political, economic or military responses of others in the region.

The only power that could mount such a strategic threat to the region is China.

In conjunction with the white paper’s release, Prime Minister Kevin Rudd told the Associated Press, “It's as plain as day that there is a significant military and naval build-up across the Asia-Pacific region, that's a reality, it's a truth, it's there. Either you can simply choose to ignore that fact, or to incorporate that into a realistic component of Australia's strategic assumptions about what this region will look like over the next two decades." Australia projects a 3% annual increase in defense spending until 2018, on top of annual 2.5% increases to cover inflation. Among the new programs planned are the purchase of 100 F-35 fighter-bombers and 12 attack submarines. Such weapons are not being procured to fight pirates.

In the arms race cited by Rudd, naval shipbuilding in Asia will run about $25 billion over the next two years, and $60 billion over the next five. China and Japan are setting the pace, but other states are striving to improve their capabilities as well.

The F-35 “joint strike fighter” will be the mainstay of American air power, and is high on the want list of Japan and Taiwan. Lockheed Martin has also pitched the warplane to India and South Korea. The political and military advantages of having America’s allies around the Pacific Rim operate the same combat aircraft are obvious. The same logic holds for letting Japan buy the F-22 air superiority fighters President Obama has cut from planned U.S. procurement.

The Australian white paper refers to “our key strategic partners (the United States, Japan, and increasingly India)” in the same formulation as has been used in Japanese circles. It is understood that, “Japan's alliance with the United States has been a key stabilising feature of the postwar regional security environment and will continue to play a vitally important role.” Speaking in Perth May 1, Japanese Foreign Minister Hirofumi Nakasone endorsed the Australian assessment, “Certainly in relation to China, as you've indicated over the last 21 years, China has continued to increase its military expenditure in double-digit figures, and from the point of view of the region it is an issue of some concern.”

The white paper spends a considerable amount of time discussing China’s economic growth and its role in regional trade. As in the United States, there are business interests in Australia who profit from doing business with a growing China, and who are thus inclined to advocate an appeasement policy towards Beijing to keep private commerce flowing. In a speech at the Chinese embassy in Canberra March 18, Frank Tudor, chairman of the Australia China Business Council, noted that “The enormous benefits of the China driven resources boom have left Australians feeling more positive than Americans about China’s rise.” Australia runs a trade surplus with China whereas the U.S. ran a record $266 billion deficit with China last year, and has sent Beijing over $1.5 trillion since 2000.

Still, national security remains a factor in Australian economic policy. The government blocked the purchase of OZ Minerals by state-owned China Minmetals Corporation in March. The attempt by state-owned Chinalco to double its ownership stake in the British-Australian mining group Rio Tinto has been very controversial, with public opinion running strongly against the deal. The Chinese attempt to invest $19.5 billion to expand their stake from 9% to 18% has been rolled by to a 15% bid. China is Australia’s largest market for natural resource exports, but there is a fundamental difference between selling products to Chinese consumers and selling the means of production (factories, mines, farms) to the Beijing government. Around the world China has been buying energy and raw material supplies so they can “import from themselves” rather than share the benefits of commerce with foreign suppliers. Australian regulators will make their decision on the Rio Tinto issue next month.

Even Frank Tudor drew a distinction between different types of foreign investment when he told the Chinese, “resources may test commerciality and may be subject to close scrutiny. Joint investment to commercially exploit green-field development of resources and build productive capacity creating jobs is on the other-hand more likely to represent a win-win outcome.” He also noted that the United States and Japan both have more invested in Australia than China. Traditionally, commerce and capital align with strategic interests. Economics should build alliances through shared benefits, not strengthen rivals through the transfer of wealth and resources.

In the United States, defense programs are on hold pending the release of a new Quadrennial Defense Review this summer. The fiscal 2010 defense budget was not, however, a good omen in that it contained projected cuts in exactly the type of advanced weapons (the F-22, warship construction, missile defense) that would be needed to contain rising Chinese military power. As the QDR is being prepared, American strategists would do well to frame their thinking as their Australian counterparts did when they set out the goal of their white paper.

From the outset, we need to have a clear view of how much strategic risk Australia is prepared to bear, and hence how much military power we should seek to develop. The more Australia aspires to have greater strategic influence beyond our immediate neighbourhood - that is to say the ability to exert policy influence that is underpinned by military power - the greater the level of spending on defence we need to be prepared to undertake. If we want to back up strategic influence with military power, we have to be prepared to invest the resources required, and to be confident that the security benefits outweigh those costs.

The Land Down Under is looking to the United States to determine which power will rule in the Asia-Pacific theater in the near future. What message are we sending?

William Hawkins is a consultant on international economics and national security issues.

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